The Facts About Gold and Gold Speculations
Gold was essential 3,000 years ago and will be essential 3,000 years from now. But can we contend a same for dollars, euros, yen, or pounds?
Gold maintains a value (on average) over centuries. Can we design identical longevity for debt formed fiat currencies that are managed by politicians and combined with copy presses or computers in executive banks?
If “printing money” truly combined resources people and countries would be many wealthier given many executive banks have been “printing” rapidly. The Fed has “printed” about $4 Trillion given a 2008 predicament to bailout banks and “stimulate” a economy. In today’s prices that would be about 3 billion ounces of gold, or approximately 30 years of tellurian bullion production. Central banks wish to conduct economies by regulating paper and digits instead of genuine earthy gold.
Gold Facts and Gold Cycles:
Gold prices over a past 40 years have been manipulated adult and down of course, though we can mostly determine that chronological prices are facts. Note a graph subsequent of bullion prices – record scale over 40 years – and note a immature straight lines each 98 months – about each 8 years. Major lows have occurred about each 8 years.
Note a identical graph subsequent display bullion highs. Vertical red lines are spaced 95 months detached – about each 8 years. Major highs have occurred about each 8 years.
Gold cost parallels:
- From Aug 1971 (when President Nixon “temporarily” consummated a dollars for bullion agreement with a world) to Apr of 1974, bullion augmenting in cost by about a cause of 4.5. It afterwards forsaken by about 47% in 2 1/3 years.
- From Apr 2001 to Aug 2011 bullion augmenting in cost by about a cause of 7.5 and afterwards forsaken by about 46%.
- The convene into 1974 took 3 – 5 years while a 2001 – 2011 pierce took 10 years. The cost of bullion had been compelled during a 1960’s by a London Gold Pool, and when a tranquil cost pennyless free, it changed fast to a new and “shocking” high tighten to $200. The bullion cost had been reduction compelled during a 1990s so a pierce into 2011 took many longer.
- The 1974 – 1976 dump took about 2 years and changed about 47%. The Aug 2011 – Jul 2015 dump took twice as prolonged and changed about 46%. Both a moves adult and down took longer than in a 1970s.
- After a nearby 50% retracement in a 1970s, bullion rose in a burble by a cause of about 8.5 in 3.5 years.
- Suppose, given new cost moves have taken twice or 3 times longer, that bullion moves aloft for 7 – 10 some-more years and moves ceiling by a cause of 5 – 10 from a Jul low. That puts a cost of bullion during $5,000 to $10,000 in 2022 to 2025.
- That could never happen! Right? Well, maybe?
Consider (all could boost a cost of gold):
- Global debt (official), not counting unfunded liabilities, exceeds $200 Trillion. It will boost though substantially will not be paid. More debt means some-more banking in circulation, currencies are devalued, and bullion becomes some-more expensive.
- US executive debt exceeds $18 Trillion and is fast increasing. Unfunded liabilities, depending on who is counting, are another $100 – $200 Trillion, or more. Politicians will spend and amalgamate currencies.
- Excessive debt is deflationary. Central banks can’t endure deflation so acceleration is their game. They will imitation and imitation and print. Don’t design a “money printers” to go sensitively into a night and acknowledge failure…
- War is rarely essential for certain industries and financial groups. Those groups competence sustain war, and several countries competence need a fight to obstruct courtesy and emanate inflation, some-more debt, and impulse to their economies.
- Currency wars, whereby countries amalgamate their currencies to “stimulate” exports and trade, are in progress. Nobody wins those wars.
- The Chinese batch marketplace has already crashed.
- The US batch marketplace is exposed to a identical crash.
- Unpayable debt in Greece, Italy, Chicago, Puerto Rico, and 99 others… could be a problem …
- Crude oil prices and many line have already crashed. Will a $Billions in junk holds associated to shale oil default?
- Will a US explosve and invade Syria?
- Escalation and some-more fight in Ukraine?
- War with Russia?
- Escalation in South China Sea and fight with China?
- Israel and Iran competence not “play nice.”
- What about chief armed Pakistan?
- And many some-more …
Yes, mercantile and financial conditions substantially will deteriorate, executive banks will print, and bullion prices will rise. The subsequent 8 year bullion cycle low is due in 2017 – it competence be a brief and pointy dump heading into several some-more years of convene toward a 8 year cycle high around 2019. However cycles might turn reduction critical as a effect of strenuous mercantile and financial stress. We shall see many aloft bullion prices, regardless of cycle influences.
A elementary dual doubt pass/fail test:
- Would we rather have a 100,000 (dollar, euro, pound) certificate of deposition (paying peanuts) in a bank that is formulation a bail-in, denominated in a dodgy fiat banking corroborated by an arguably ruined supervision …. or
90 ounces of bullion stored somewhere safe?
- Yes or No? Do we trust we can steal the approach out of debt and into prosperity?
Remember, this exam is pass/fail so don’t overthink it.
Courtesy: Gary Christenson
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